Adaro boosts bond sale 33% to $400m on high demand

Adaro boosts bond sale 33% to $400m on high demand

Netty Ismail and Denise Kee, Bloomberg/Jakarta

PT Adaro Indonesia, the country's largest coal producer, is increasing its sale of high-yield bonds 33 percent to US$400 million after attracting excess demand, a banker said.

The company plans to price the five-year bonds on Thursday in New York yielding between 8.75 percent and 9 percent, the banker said, asking not to be identified. Investors placed orders for about $1.5 billion of the bonds, the banker said. Adaro earlier planned to sell $300 million of debt.

Adaro, which runs a mine in Kalimantan island, is selling bonds to help repay $600 million investors borrowed in August to help pay for their purchase of Adaro's mine and related operating assets, including a coal-loading terminal.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are arranging the bond sale. The mining company also hired DBS Group Holdings Ltd., Sumitomo Mitsui Banking Corp, and JPMorgan to arrange a $250 million four-year loan to help repay debt and cut interest costs.

Investors in Adaro include GIC Special Investments, a Singapore government agency that manages its long-term foreign reserves; private equity units of Citigroup Inc. and Goldman; and Indonesian investors including Edwin Soeryadjaya, son of the founder of the country's largest carmaker, PT Astra International.

The dollar-denominated bonds are rated Ba3, three levels lower than investment grade, by Moody's Investors Service and B+, one grade lower, by Standard & Poor's. The bonds will be issued by Adaro Finance B.V., wholly owned by the coal producer, and guaranteed by Adaro Indonesia and related company, PT Indonesia Bulk Terminal.

Adaro has a "consistent operating and production track record spanning the last 13 years," Moody's said. The mining company has "large available coal reserves" of about 1.334 billion metric tons, equivalent to a reserve life of 55 years, the rating company said.